Major International Business Headlines Brief::: 27 September 2021

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Major International Business Headlines Brief::: 27 September 2021

 


 

 


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ü  Fuel supply: UK suspends competition law to get petrol to forecourts

ü  Farmers warn of Christmas turkey shortage due to lack of staff

ü  As Americans spend, credit card debt is ticking back up

ü  U.S. export tightening slows advance of Chinese C919 jet -sources

ü  Analysis: Europe's IPO market roars back to life but where are the SPACs?

ü  Cryptocurrency exchanges rush to cut ties with Chinese users after fresh
crackdown

ü  Many Apple, Tesla suppliers halt production in China amid power pinch

ü  Electric supercars need to lose weight, power up and cool down

ü  Asia shares hesitant as oil hits 3-year highs

ü  APPEC-Global oil demand seen reaching pre-pandemic levels by early 2022

ü  Crypto-linked stocks plunge in Hong Kong, bitcoin steadies

ü  Aldi UK to invest $1.8 bln to accelerate growth

ü  Nigeria: As Covid Shut Businesses in 2020, Only Four Nigerian Banks Made
More Money Online

ü  Nigeria: Back to Basics - How to Make Foreign Investment Work for Nigeria

ü  Ghana: Rice Farmers Need Finance for New Technologies, but Banks Don't
Trust Them

ü  Tanzania: Come All Ye Who Are Loaded - Samia's Offer to Investors Abroad

 

 

 

 

 


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Fuel supply: UK suspends competition law to get petrol to forecourts

The government is to suspend competition law to allow oil firms to target
fuel deliveries at petrol stations following recent panic buying.

 

Officials said the move would make it easier for companies to share
information and prioritise parts of the country most at need.

 

It follows days of long queues at the pumps, after fears of disruption to
the fuel supply sparked panic buying.

 

Ministers are also considering deploying the Army to deliver fuel.

 

The option is under discussion, and could be examined at a possible cabinet
meeting on Monday.

 

The Petrol Retailers Association has warned that as many as two-thirds of
its membership of nearly 5,500 independent outlets are out of fuel, with the
rest of them "partly dry and running out soon". The UK has a total of more
than 8,000 filling stations.

 

 

Announcing the measure to exempt the oil industry from the Competition Act
1998, Business Secretary Kwasi Kwarteng said the government had
"long-standing" contingency plans to maintain fuel supplies.

 

"While there has always been and continues to be plenty of fuel at
refineries and terminals, we are aware that there have been some issues with
supply chains.

 

"This is why we will enact the Downstream Oil Protocol to ensure industry
can share vital information and work together more effectively to ensure
disruption is minimised.

 

"We thank HGV drivers and all forecourt staff for their tireless work during
this period."

 

The government also relaxed competition law in March 2020, to help
supermarkets work together to maintain food supplies.

 

A shortage of lorry drivers has caused problems for a range of industries in
recent months, from supermarkets to fast food chains.

 

In recent days, some fuel deliveries were affected, leading to panic buying
and lengthy queues at some petrol stations.

 

In a joint statement from companies including Shell, ExxonMobile and
Greenergy, the industry reiterated that pressures on supply were being
caused by "temporary spikes in customer demand - not a national shortage of
fuel".

 

PRA chairman Brian Madderson told the BBC the shortages were down to "panic
buying, pure and simple", with oil companies prioritising keeping motorway
service station pumps topped up.

 

Pumps were mainly running dry in Britain's urban areas, while Northern
Ireland was currently unaffected, he said.

 

Mr Madderson told BBC Radio 4's Today programme on Monday that filling
stations were being restocked, but there were not enough deliveries to
restore their normal levels of fuel.

 

"One of our members yesterday received a tanker at midday and by late
afternoon the entire tanker had disappeared into people's cars," he said.

 

On Saturday, the government announced it would offer temporary visas,
lasting until Christmas Eve, to 5,000 foreign fuel tanker and food lorry
drivers and 5,500 poultry workers in a bid to limit disruption in the build
up to Christmas.

 

Other measures include sending nearly one million letters to drivers who
hold an HGV licence - to encourage them back into the industry - and plans
to train 4,000 people to become HGV drivers.

 

Elizabeth de Jong, director of policy for Logistics UK, told Today that it
would be "days, possibly a couple of weeks" before the visa applications
were open.

 

She said the industry had wanted more visas to be available and for a longer
time, but she said the key issue now was to make them attractive to drivers,
which was likely to mean offering good wages.

 

 

media captionGrant Shapps: "There is plenty of petrol in the country"

The UK had lost 72,000 drivers between the second quarter of 2019 and the
same period in 2021, Ms de Jong said - partly due to people returning to the
EU after Brexit.

 

At the same time, she said Covid-19 had disrupted testing for HGV licences,
making it harder to replace the lost drivers.

 

The shortage of drivers and other workers is also causing concern in the
food and retail industry.

 

The British Retail Consortium said the number of visas being offered was
"too small" to make an impact on the disruption expected at Christmas.

 

Andrew Opie, director of food and sustainability policy at the trade
association, told the BBC: "I think we're going to see less choice, less
availability, possibly a shorter shelf life as well, which is really
disappointing because this could have been averted."

 

Meanwhile, turkey farmer Kate Martin warned supermarkets could run out of
poultry before Christmas.

 

She said there were fewer turkeys being produced because because the big
processors "know they will not get them processed".

 

Recruitment for additional short-term HGV drivers and poultry workers will
begin in October, with the visas valid until Christmas Eve.-BBC

 

 

 

Farmers warn of Christmas turkey shortage due to lack of staff

Farmers are warning of a Christmas turkey shortage because visa changes to
allow labour recruitment from abroad have come too late.

 

A poultry association said big producers have already scaled back because
they assumed they would not have enough staff to process birds.

 

And turkey farmer Paul Kelly told the BBC the damage had already been done.

 

The government has announced a visa scheme to allow 5,500 poultry workers
into the UK on three-month contracts.

 

As part of the changes, 5,000 HGV drivers will be allowed into the UK on
similar contracts in an attempt to keep supermarket shelves stocked and
petrol stations supplied with fuel.

 

Kate Martin, chairwoman of the Traditional Farm Fresh Turkey Association,
said: "This year it's looking like there is a national shortage of turkeys
when we're talking about supermarket shelves, rather than buying direct from
your farm.

 

"It is the supermarket shelves that will be emptier of turkeys this year
than they have been before, only because there have been less turkeys placed
on the ground; only because the big processers know that they will not get
them processed."

 

She said some members of her association had already seen a rise in orders,
with one reportedly seeing a 400% increase on last year.

 

Ms Martin said farms "are now missing a whole host of their workforce that
they have been training and investing in over the last however many years.
Those workers are no longer available for us to use on a seasonal basis -
they will go find work in mainland Europe instead."

 

Paul Kelly, who runs the KellyBronze farm, said the major producers were
resigned to producing fewer birds for Christmas.

 

"The damage has already been done for the bigger processors because they
have not put the turkeys on the farm," he said.

 

Smaller producers, however, might be better prepared as they tended to
recruit local labour rather than draft in large numbers of migrant staff, he
added.

 

'No answer'

One supermarket group told the BBC it was far too early to speculate about
Christmas stocks.

 

The British Poultry Council has estimated there are nearly 7,000 vacancies
across the sector, leading some chicken producers to cut their output, and
sparking shortages at restaurant chains Nando's and KFC.

 

Mr Kelly said: "There are chickens being killed on farms at the moment.
There are pigs being shot in fields, because there are not enough people
there to do the jobs."

 

A temporary visa scheme "is definitely not an answer" for the long term, he
added.

 

Transport Secretary Grant Shapps said the package of visa measures would
help the food and haulage industries cope in the run-up to Christmas.

 

"After a very difficult 18 months, I know how important this Christmas is
for all of us and that's why we're taking these steps at the earliest
opportunity to ensure preparations remain on track."

 

However, some business leaders said the measures did not go far enough, with
the British Chambers of Commerce saying they were the equivalent of
"throwing a thimble of water on a bonfire".-BBC

 

 

 

As Americans spend, credit card debt is ticking back up

(Reuters) - Early in the pandemic, there were encouraging and surprising
signs about the decline of credit card debt.

 

Now, that trendline seems to be changing.

 

Many Americans stayed at home at the start of COVID-19 and did not spend
like they usually do. They also received several rounds of emergency cash
assistance, helping to chop away at those credit-card bills, at least
temporarily.

 

Spending is ticking back up – and the results are starting to show up on our
monthly statements.

 

In fact, 42% of those with credit card debt, or 59 million Americans, say
they have added to their balances since the beginning of the pandemic,
according to a new study by personal finance site Bankrate.com.

 

"Things are better for some, but they are not better for everybody,"
explains Ted Rossman, Bankrate’s senior industry analyst.

 

The end of stimulus checks, expanded unemployment benefits and the eviction
moratorium does not bode well for debt management, Rossman added.

 

This trend reversal is reflected in the most recent numbers of the Federal
Reserve Bank of New York. Its Quarterly Report on Household Debt and Credit
found that credit-card bills rose by $17 billion in 2021’s second quarter,
to $790 billion nationally. That was the first uptick after four straight
quarters of declines.

 

Also headed north were auto loans, by $33 billion in the quarter, and
mortgage debt, by $282 billion. All told it makes for total household debt
of $14.96 trillion, a quarterly rise of 2.1%.

 

DIFFERENT DEBT, DIFFERENT STRATEGIES

 

Of course, not all debt is the same, nor should it automatically be
considered a bad thing. The rise in mortgage debt can be attributed to many
people buying homes in a hot real estate market – and with interest rates
near historic lows, that is not necessarily a concern for household balance
sheets.

 

Credit card debt is especially pernicious, though. It can be very
challenging to escape as balances rise to a certain level, combined with
sky-high interest on revolving debt – average rates are currently north of
16%, according to Bankrate. Add in late fees or missed payments, and the
cycle is hard to break.

 

Those concerns are highlighted in a recent survey by real estate firm
Clever. Almost one in five of those with credit card debt, 18%, report
having bills over $20,000. Meanwhile 40% of those who carry a monthly
balance haven’t been debt-free from credit cards since before 2018, and 15%
have been struggling with it for more than 15 years.

 

"We also found that 57% of people had missed a credit-card payment, and the
majority of those were in the past year," says Francesca Ortegren, lead
researcher for Clever. "It could cause a snowball effect over time, and make
it much harder to climb out."

 

Chronic debt can make people feel pretty bleak. A third of those with credit
card debt think it will take at least a couple of years to pay it off, and
20% say three years or more, according to Clever. Most depressing of all, 3%
think it will never be possible.

 

CHARTING A WAY OUT

 

To be sure, there are glimmers of good news in the debt data. Even though
credit card bills are once again headed back up, the early-pandemic declines
means that total amounts are still $140 billion below the end of 2019's
levels, according to the Federal Reserve Bank of New York. And student loan
debt actually dropped in the second quarter of 2021, by $14 billion.

 

Meanwhile personal savings rates are still elevated, compared to historic
norms. And debt delinquencies and defaults are relatively modest, notes
Bankrate’s Rossman -- which is somewhat surprising, given the length and
breadth of our ongoing pandemic crisis.

 

What Rossman worries about: That our early-pandemic frugality will fall by
the wayside, and the urge to get out and spend after being cooped up for so
long will throw whatever progress we have made into reverse.

 

Instead, Americans should be proactive. He suggests: Take advantage of the
growing number of 0% card balance-transfer offers, partner with nonprofit
credit counselors like Money Management International or GreenPath, or pay
off high-rate cards with a lower-rate personal loan.

 

"It would be nice if we could keep lower balances as a part of our future,"
Rossman says. "You don’t want to throw that all away and run those balances
right back up – because this is very expensive debt."

 

The Thomson Reuters Trust Principles.

 

 

 

U.S. export tightening slows advance of Chinese C919 jet -sources

(Reuters) - China's C919 jetliner - a no-show at the country's biggest air
show this week – has found it harder to meet certification and production
targets amid tough U.S. export rules, according to three people with
knowledge of the programme.

 

The state-owned manufacturer, Commercial Aircraft Corp of China (COMAC), has
been unable to get timely help from suppliers and has run out of some spare
parts, those people said.

 

As of December 2020, the U.S. has required special licenses to export parts
and technology assistance to any company with ties to the Chinese military.
That has thrown a monkey wrench into the C919 programme, which has been in
development for 13 years - one of the longest such periods in aviation.

 

U.S.-linked suppliers are gradually receiving the licences, but the hiccup
has slowed down Chinese certification, and months-long delays threaten to
affect early production, said the people, who declined to be named because
of the sensitivity of the matter.

 

COMAC has 815 provisional orders, but only China Eastern Airlines
(600115.SS) placed a firm order for five jets.

 

The state-backed airline said in August it expects to receive its first C919
by the end of the year, two in 2022 and two more in 2023.

 

A slow production rampup would mean the C919 will not pose a near-term
threat to Airbus (AIR.PA) and Boeing (BA.N), which produce dozens of
narrowbodies a month.

 

"One of the biggest hurdles is going to be the supply chain, especially now
with inflation, material availability and supplier changes," said aerospace
supply chain expert Alex Krutz at U.S-based aerospace consultancy Patriot
Industrial Partners.

 

"The suppliers may not have the liquidity to make the post-certification
changes or be willing as they were a few years ago to continue supporting an
initial lower-rate production programme like COMAC," he added.

 

COMAC is years behind its initial certification schedule - one reason it did
not take the C919 to the China Airshow. read more

 

"COMAC are very preoccupied with test flights. They're behind schedule and
are flying as much as they can to reach the minimum hours needed for Chinese
certification," an industry source told Reuters. "Despite all the issues,
COMAC is very determined to get certified, as this is a paramount political
task."

 

Sources say that the C919 is likely to receive its type certificate from
China's aviation regulator by the end of this year, but that there will be a
long list of limits on flight operations. Even after the certification,
COMAC must make upgrades, the sources said.

 

COMAC and the Civil Aviation Administration of China (CAAC) did not respond
to requests to comment.

 

CAUTIOUS REGULATOR

 

The sources with knowledge of the C919 programme said the jet's progress
seemed to mirror the certification pattern and slow production of its
predecessor, the ARJ21 regional jet.

 

The ARJ21 faced a 2.5-year gap between obtaining a "type certificate", which
declares the design safe, and a "production certificate" allowing it to
enter mass production.

 

That contrasts with the West, where those certificates are typically granted
around the same time.

 

About 60 ARJ21 aircraft have been delivered to date, but the production
ramp-up was also slow, rising from two planes a year in 2017 to 24 in 2020,
according to COMAC data.

 

The C919 is in a phase called "batch production", where each plane requires
a sign-off by the regulator.

 

FOREIGN PARTS

 

The C919 is assembled in China but relies heavily on Western components,
including engines and avionics. That has made it vulnerable to crackdowns on
key technology transfers.

 

The addition of two key COMAC subsidiaries to a list of companies with
military ties in December 2020 created bureaucratic licensing requirements.

 

China has been doubling down on developing its own engine for the C919;
state engine maker Aero Engine Corporation of China (AECC) will display a
model of the CJ-1000 engine at the air show, but the domestic solution for
the airliner is years away.

 

AECC is spending 10 billion yuan ($1.55 billion) to build an industrial
complex in the southwestern city of Chengdu to manufacture engine nacelles
and thrust reversers, local media reported last month. A source with
knowledge of the matter said the complex related to CJ-1000 production.

 

The nacelle capacity is expected to reach 100 per year, enough for 50
planes, the reports said, though no target date was stated. AECC did not
respond immediately to a request for comment.

 

($1 = 6.4589 Chinese yuan renminbi)

 

The Thomson Reuters Trust Principles.

 

 

 

Analysis: Europe's IPO market roars back to life but where are the SPACs?

(Reuters) - European stock market listings have come back with a bang after
the summer lull but blank cheque firms are nowhere to be seen.

 

So far this quarter, 42 initial public offerings (IPOs) in Europe have
raised $8.5 billion, the highest amount for a decade, but there hasn't been
special purpose acquisition company (SPAC) deal since July, according to
Refinitiv data.

 

The SPAC frenzy in the United States during 2020 and the first half of 2021
was widely tipped to spill over to Europe but despite a flurry of activity
before the holiday season, the market appears to have fizzled out.

 

"The SPAC IPO market is almost dead," said German entrepreneur Christoph
Gerlinger, who considered setting up a SPAC but has shelved those plans to
focus on his job as a private equity manager investing in technology firms.

 

A SPAC is a blank cheque firm that raises funds in an IPO with the aim of
merging with a private company. Once that happens, the target becomes a
listed stock, sidestepping the traditional IPO route which is heavily
regulated.

 

SPACs became one of Wall Street's hottest investment trends last year as
many retail investors stuck at home during COVID-19 lockdowns placed
speculative bets on them.

 

In Europe so far this year, SPAC issuance peaked in the second quarter with
15 deals raising $3.7 billion, followed by seven more in July worth $1.4
billion, but there have not been any since, the Refinitiv data showed. read
more

 

Overall, 26 SPACs have listed in Europe this year, raising $6.6 billion.
Over the same period in the United States, 433 new SPACs have raised $118
billion.

 

 

The last time there were more European IPOs in a third quarter was in 2007
with 99 deals and the amount raised was the highest since 2011, when IPO
proceeds came in at $9 billion, according to the Refinitiv data as of Sept.
24.

 

SELECTIVE ISSUES

 

SPACs offer companies such as technology firms with high growth potential
but little near-term visibility on revenue and profit an avenue to raise
funds in a less onerous way than a full-blown IPO.

 

They also offer profit opportunities for SPAC sponsors - usually well-known
entrepreneurs - as well as investors, who get the chance to buy into private
companies via the stock market rather than less liquid venture capital
funds.

 

But SPAC sponsors and bankers say demand has dried up in the face of poor
performance, a regulatory crackdown in the United States, and waning market
sentiment. read more

 

The European Union's markets watchdog also warned in July that SPACs might
not be for everyone due to risks of dilution, conflicts of interests and
uncertainty as to the identification and evaluation of the target company.
read more

 

"I only expect selective new issues of quality SPACs coming to market," said
Christoph Stanger, co-head of equity capital markets in EMEA at U.S.
investment bank Goldman Sachs.

 

In the third quarter globally, only 85 SPACs listed, raising $14 billion,
down from 309 SPACs raising $95 billion in the first quarter, according to
the Refinitiv data.

 

While some investors in U.S.-listed shell companies made fortunes overnight
when the shares surged, many who held onto their investments are nursing
losses.

 

"When an investor can buy an existing SPAC at a discount to list price it's
less attractive to buy a new SPAC," said one equity capital markets banker.

 

HOMETOGO DEBUT

 

In Europe, shares in the first company to be created via a SPAC merger this
year started trading last week, but with a whimper rather than a bang.

 

German travel tech startup HomeToGo (HTGG.DE), the target of Lakestar SPAC
I, backed into the Frankfurt stock market on Sept. 22 by completing its
union with the listed shell company.

 

HomeToGo's shares edged higher on the day, but were still 10% lower than the
price Lakestar listed in February and 33% below the peak the shell company's
shares hit that month.

 

European companies such as air taxi startup Lilium (LILM.O), car seller
Cazoo (CZOO.N), payments firm Paysafe (PSFE.N) and Global Blue (GB.N),
electric vehicle charging firm EVgo (EVGO.O) and cyber security company
Arqit (ARQQ.O) have all successfully gone public in the United States via
SPAC deals.

 

But most are below their SPAC issue price, with a few notable exceptions
such as Arqit. Globally, about 60% of SPACs that have bought their target
company are now trading below their issue price, analysts say.

 

There was a different mood in the spring when the buoyant U.S. market
triggered the start of a European SPAC wave.

 

Tikehau Capital-backed Pegasus Europe (PACE.AS) raised $606 million in April
followed by Hedosophia European Growth (HEGA.AS) which raised $483 million,
both listing in Amsterdam.

 

Then the market started to cool as investors realised the hunt for targets
was pushing up valuations, making investments less attractive, analysts
said.

 

"Investors are currently unwilling to buy into new SPACs while there are 423
SPACs with $131 billion in raised capital out there waiting to find takeover
targets," entrepreneur Gerlinger said.

 

HERE TO STAY?

 

German investor Primepulse, for example, explored a SPAC deal this year and
held some meetings with investors, but has said it decided to drop the
project due to waning demand.

 

Many of the SPAC mergers that did get done also struggled in the final
stretch as some shareholders opted to redeem their money rather than staying
invested after the merger. Lilium, for example, had redemptions of 66% while
it was 37% for Hometogo.

 

That meant SPAC managers had to put more of their own money into deals,
forfeit lucrative compensation or abandon the mergers altogether. And SPACs
that don't seal a merger within two years of their IPOs have to return the
money to investors.

 

Rene van Vlerken, head of listing at Euronext Amsterdam - which has
attracted a number of Europe's SPAC deals - said the current weakness would
eventually be overcome.

 

"There are a lot of SPACs in the market, all looking for attractive business
combinations. The market is waiting for a number of good acquisitions by
European SPACs," he said.

 

Giacomo Ciampolini, head of EMEA Alternative Capital at Citi, also said the
SPAC market would eventually rebound.

 

"SPACs have already started to arrive in Europe, combinations have been
announced and closed and there are many sponsors, companies and investors
who recognise the merits of the instrument," he said.

 

The Thomson Reuters Trust Principles.

 

 

 

Cryptocurrency exchanges rush to cut ties with Chinese users after fresh
crackdown

(Reuters) - Cryptocurrency exchanges and providers of crypto services are
scrambling to sever business ties with mainland Chinese clients, after
Beijing last Friday issued a blanket ban on all crypto trading and mining.

 

In a culmination of years of efforts to rein in the sector, 10 powerful
Chinese government bodies including the central bank, said overseas
exchanges were barred from providing services to mainland investors via the
internet - a previously grey area - and vowed to jointly root out "illegal"
cryptocurrency activities.

 

Huobi Global and Binance, two of the world's largest exchanges and popular
with Chinese users, have stopped new registrations of accounts by mainland
customers. Huobi also said it would clean up existing ones by the end of the
year.

 

"On the very day we saw the notice, we started to take corrective measures,"
Du Jun, Huobi Group co-founder said in a statement to Reuters.

 

 

Du did not give an estimate how many of its users would be affected, saying
only that Huobi, once the world's biggest crypto exchange, had embarked on a
global expansion strategy many years ago and seen steady growth in Southeast
Asia and Europe.

 

Shares in crypto-related firms tumbled on Monday with crypto asset manager
and trading firm Huobi Tech (1611.HK) plunging 23% and OKG Technology
Holdings Ltd (1499.HK), a fintech company majority owned by Xu Mingxing, the
founder of cryptoexchange OKcoin, losing 12%.

 

TokenPocket, a popular service provider of crypto wallets, also said in a
notice to clients that it would terminate services to mainland Chinese
clients that risk violating Chinese policies and would "actively embrace"
regulation. It added it welcomes cooperation from China in blockchain
technologies.

 

Many Chinese crypto exchanges shut down or moved offshore in 2017, after
China, once the world's biggest bitcoin trading and mining centre, banned
such platforms from converting legal tender into cryptocurrencies and vice
versa. Then in May this year, China's State Council vowed to ban bitcoin
trading and mining.

 

 

Amid the crackdown, other types of Chinese crypto companies have been moving
out of China over the past few months, said Flex Yang, founder and CEO of
Babel Finance, adding that the impact from the latest policy would be
"limited".

 

The Chinese crypto financial services provider this month opened new
business headquarters in Singapore.

 

Cobo, a crypto asset management and custodian platform, also recently moved
its headquarters from Beijing to Singapore.

 

The Thomson Reuters Trust Principles.

 

 

 

Many Apple, Tesla suppliers halt production in China amid power pinch

(Reuters) - Several key Apple(AAPL.O) and Tesla (TSLA.O)suppliers said they
had halted production on Sunday at some of their Chinese facilities to
comply with the country's tighter energy consumption policy.

 

Apple supplier Unimicron Technology Corp (3037.TW) said that three of its
subsidiaries in China had to stop production from midday on Sept. 26 until
midnight on Sept. 30 to "comply with the local governments' electricity
limiting policy".

 

It did not expect a major impact, adding that other factories would make up
production, the company said in a statement late on Sunday.

 

The temporary stop to production by the companies puts supply-chain
continuity at risk during a peak season for electronics goods including the
latest iPhones.

 

 

Eson Precision Engineering, an affiliate of Foxconn, said it suspended its
production from Sunday until Friday at its facilities in the Chinese city of
Kunshan, Nikkei reported earlier.

 

IPhone speaker component supplier Concraft Holding(4943.TW), which owns
manufacturing facilities in the Chinese city of Suzhou, said it would
suspend production for five days until noon Thursday and utilize its
inventory to support the demand.

 

China's power crunch, caused by tight coal supplies and toughening emissions
standards, has triggered a contraction in heavy industry across several
regions and is dragging on the country's economic growth rate, analysts
said. 

 

The Thomson Reuters Trust Principles.

 

 

Electric supercars need to lose weight, power up and cool down

(Reuters) - Speed has always been paramount for supercar makers, and now
they're in the race of their lives to go electric before climate policy cuts
their combustion engines.

 

That's why the likes of Ferrari (RACE.MI) and Mercedes-Benz are turning to
startups such as Oxford-based electric motor company YASA for expertise and
technology to solve the unique challenges of electrifying the
highest-performance vehicles.

 

Batteries are immensely heavy and electric motors overheat if driven too
hard - big problems for a niche industry that charges hundreds of thousands
of dollars for lightweight cars capable of screaming round 10 laps of a
track at full throttle.

 

This year Daimler (DAIGn.DE) bought YASA, which has developed an "axial
flux" high-performance electric motor that weighs 23 kg (50.7 lb), a
fraction of a near-300 kg V12 engine in a Ferrari, and is about the size and
shape of a steering wheel.

 

YASA already makes motors for Ferrari, Swedish supercar maker Koenigsegg,
plus an unnamed British supercar company. It will now supply the
high-performance AMG brand at Daimler, which will soon assume the name of
its car business Mercedes-Benz.

 

Based just a few miles from YASA, Saietta (SED.L) has developed a range of
water-cooled axial flux motors. The company is gearing up to produce motors
for the vast Asian motorbike market, but told Reuters it had created a
larger prototype and was in talks with one hypercar maker, and that two
others had expressed interest.

 

"These manufacturers know combustion engines forwards, backwards and inside
out," said Saietta Chief Commercial Officer Graham Lenden. "But they don't
know electric powertrains and what they're looking for is someone to hold
their hand."

 

Yet this is uncharted territory, with no clear road map to electric for
high-performance vehicles yet. Supercar makers will have to invest billions
of dollars to survive the disappearance of combustion engines, with no
guarantee that the technologies they adopt will pay off in the long term.

 

 

WEIGHT IS THE ENEMY

 

Supercars and the highest-end hypercars - both sportscars that verge on
professional racing level performance - are a highly profitable, capital
intensive niche market for automakers.

 

Consultancy AlixPartners and data firm IHS Markit estimate more than 152,000
"luxury" and "super luxury" sportscars ranging in price from 100,000 to 10
million pounds ($137,000-13.7 million) will be sold globally in 2021, with
the market expected to rise nearly 50% to 223,000 cars in 2026.

 

YASA founder Woolmer said, though, that his company's long-term brief from
Daimler was to bring the costs down in future iterations of its motor so the
German carmaker can use them across its entire car range as it shifts to
electric.

 

"Automotive technology doesn't scale to volume overnight, you tend to start
with the premium niche sectors," Woolmer says.

 

Makers of high-performance electric cars will ultimately have to find ways
to develop lighter, more powerful batteries. But as today's battery
technology cannot compete with the sustained power of a petrol engine, they
are also rethinking everything from electric motors to car body materials.

 

Axial flux electric motors are flat, round devices - dubbed "pancakes" -
that are lighter and more efficient than conventional cylindrical "radial
flux" motors, or "sausages."

 

YASA's motor is oil cooled, so will never overheat and is far more efficient
than a conventional motor, said Tim Woolmer, who developed the device as
part of his doctorate at the University of Oxford and then founded the
company in 2009.

 

Because the motor is more efficient, it can extend the range of an electric
vehicle up to 7%, or because it uses less power it allows carmakers to take
out some of the heavy batteries and reduce their vehicle's weight by to 10%,
he added.

 

YASA has a small facility at its Oxford headquarters where it makes motors
for Ferrari's SF90 Stradale hybrid and 296 GTB hybrid models, and test
motors for AMG. Daimler is studying how to scale up that production at its
own factories.

 

YASA's CEO Chris Harris said its acquisition by the German giant had not
ended its work with clients like Ferrari.

 

"They want us to continue working with our supercar customers because that's
the leading edge," he added. "That technology when it matures cascades
down."

 

Ferrari's Chief Technology Officer Michael Leiters described the YASA motor
in its hybrid models as an "automotive first", adding that the Italian
sportscar maker would lean on the technical expertise of suppliers in its
quest to go electric.

 

WANTED: BATTERY REVOLUTION

 

Car companies are also looking beyond motors in their weight-loss plans.

 

Mate Rimac, CEO of Croatian electric hypercar maker Rimac, said the chassis
and the body of its C-Two model were both made of carbon fibre, and that
batteries formed part of the car's structure to save weight.

 

The company, which is forming a joint venture with Volkswagen's (VOWG_p.DE)
luxury sportscar unit Porsche that will include VW's Bugatti brand, also
uses "torque vectoring" to boost performance - motors in the wheels to help
take corners.

 

British sportscar maker Lotus has developed a new electric platform using
light aluminium alloys that cuts the vehicle's structural weight 37% and
will start producing its first fully-electric sports car in 2026.

 

Owned by China's Geely (GEELY.UL) and Malaysia's Etika Automotive, Lotus
also operates as an auto supplier and engineer to other carmakers. The
company is in advanced talks to supply the platform to another carmaker and
has received expressions of interest from several others, managing director
Matt Windle said.

 

"With the cost and speed of electrification, collaboration is the way to
go," Windle said.

 

Chinese automaker FAW (000800.SZ) has teamed up with U.S.-based engineering
and design firm Silk EV to form the Silk-FAW venture, which plans to build
electric sportscars in Italy.

 

It is using carbon-fibre components for the vehicle chassis and looking to a
high-revolution motor using copper-wiring technology from the aerospace
sector to cut the motor's weight by 20%, though it is also exploring other
options.

 

"Weight saving is even more important than a higher level of power," said
Roberto Fedeli, Silk-FAW vice president for innovation and technology.

 

Cutting weight and using more efficient motors may be enough for most
wealthy sportscar buyers who use their vehicles for recreation or to
commute, and are unlikely to want to execute multiple high-speed laps around
a race track.

 

Those who do could be in for a long wait.

 

"Unless batteries go through a massive revolution, you're never going to
carry the amount of energy that a fuel tank will carry," said YASA founder
Woolmer.

 

"For longer-form racing, it's going to be a while."

 

($1 = 0.7311 pounds)

 

The Thomson Reuters Trust Principles.

 

 

 

Asia shares hesitant as oil hits 3-year highs

(Reuters) - Asian shares got off to a cautious start on Monday as a jump in
oil prices to three-year highs could inflame inflation fears and aggravate
the recent hawkish turn by some major central banks.

 

Oil pushed past its July peaks as global output disruptions forced energy
companies to pull large amounts of crude out of inventories, while a
shortage of natural gas in Europe pushed costs up across the continent.

 

Brent added another 62 cents on Monday to $78.71 a barrel, while U.S. crude
rose 71 cents to $74.69.

 

"We forecast that this rally will continue, with our year-end Brent forecast
of $90/bbl vs. $80/bbl previously," wrote analysts at Goldman Sachs in a
client note.

 

"The current global oil supply-demand deficit is larger than we expected,
with the recovery in global demand from the Delta impact even faster than
our above consensus forecast."

 

Such an increase could stoke speculation that global inflation will prove
longer-lasting than first hoped and hasten the end of super-cheap money,
favouring reflation trades in bank and energy stocks while bruising bond
prices.

 

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS)
was flat, after three consecutive weeks of loss.

 

Japan's Nikkei (.N225) gained 0.4% on hopes for further fiscal stimulus once
a new prime minister is chosen.

 

Nasdaq futures edged up 0.1%, and S&P 500 futures 0.3%.

 

The fate of China Evergrande Group (3333.HK) remained a major unknown after
the property giant missed a payment on offshore bonds last week, with
further payment due this week.

 

Stocks in Hong Kong have felt the most pressure, though the government in
Beijing did add more liquidity to the financial system.

 

"We expect policymakers in China to allow deleveraging of property sector
debt to take hold with an eye to reducing moral hazard, but are confident
that they will actively manage the restructuring and effectively limit
financial spillovers," said analysts at JPMorgan in a note.

 

Eyes will also be on U.S. fiscal policy with the House of Representatives
due to vote on a $1 trillion infrastructure bill this week, while a Sept. 30
deadline on funding federal agencies could force the second partial
government shutdown in three years. read more

 

The week is packed with U.S. Federal Reserve speeches led by Chair Jerome
Powell on Tuesday and Wednesday, with more than a dozen other events on the
calendar.

 

The latest hawkish shift by the U.S. central bank, and several others
globally, saw bond yields seesaw before ending last week sharply higher.

 

The 10-year Treasury is at its highest since early July at 1.46% amid talk
the reflation trade could be back on as the world braces for the end of
super-cheap money.

 

The lift in yields underpinned the U.S. dollar, particularly against
emerging market currencies which compete with Treasuries for global funds.

 

Against a basket of currencies, the dollar was firm at 93.292 and just off
August's 10-month top of 93.734.

 

It even made some ground on the yen to reach a major chart barrier at 110.79
. A break of that would take the currency to territory not visited since
early July.

 

The euro was steady at $1.1719 as investors pondered the implications of a
German government led by the centre-left Social Democrats after a narrow
victory in Sunday's election.

 

The Social Democrats claimed a "clear mandate" to lead a government for the
first time since 2005, ending 16 years of conservative-led rule under Angela
Merkel.

 

"The likelihood of a political shift to the left suggests Germany's fiscal
stance could become less of a drag on the economy over the next few years
than is currently projected," said analysts at CBA in a note. "This would
ultimately benefit the euro."

 

The firmer dollar has weighed on gold, which was pinned at $1,748 an ounce
and just above a six-week low at $1,738.

 

The Thomson Reuters Trust Principles.

 

 

 

APPEC-Global oil demand seen reaching pre-pandemic levels by early 2022

(Reuters) - Global fuel demand is expected to reach pre-pandemic levels by
early next year as the economy shrugs off pandemic woes, but spare refining
capacity is likely to weigh on outlook, oil producers and traders said on
Monday.

 

While a persistent rise in COVID-19 infections in several markets has hurt
recovery in demand for some refined products such as jet fuel, consumption
trends of petrol and diesel indicate higher growth, the industry leaders
said.

 

They were speaking at the Platts APPEC 2021 conference that is being held in
a hybrid format this year, including both in-person and virtual
participants.

 

"We saw refining margins rebound as demand rebounded ... But overall for the
world, there's still a lot of unutilised capacity and a lot of capacity has
been taken off stream," said Eugene Leong, president of BP Singapore and CEO
of BP's trading & shipping arm of Asia Pacific and the Middle East.

 

"The spare (refining) capacity is probably going to act as a little bit of a
cap on margins," he said in a pre-recorded speech for the conference.

 

"This year alone we've seen some mega refining (and) petrochemical complexes
start up, so I think that's going to be challenging for refining."

 

In China, new mega refiner Shenghong Petrochemical is set to start trial
operations soon, while Zhejiang Petrochemical completed two new crude units
earlier this year.

 

Malaysia's Petronas also hopes to restart operations at its 300,000
barrels-per-day refinery-petrochemical complex with Saudi Aramco by year
end, said Arif Mahmood, Petronas' executive vice president and CEO of
downstream. read more

 

However, recovering demand is expected to boost profits for refiners and
create more room for returning or new production.

 

GLOBAL DEMAND RECOVERY

 

Brent crude futures have jumped more than 50% this year to their highest
since October 2018, helped by a recovery in fuel demand as well as tighter
supplies from the Organization of the Petroleum Exporting Countries and its
allies including Russia, a group known as OPEC+.

 

U.S. oil and gas producer Hess Corp (HES.N) expects global demand to climb
to pre-pandemic levels of 100 million barrels per day (bpd) by the end of
this year or early 2022, its president, Greg Hill, said. read more

 

The International Energy Agency (IEA) has also forecast a robust rebound
from the fourth quarter, citing "strong pent-up demand and continued
progress in vaccination programmes".

 

It expects global oil demand to average 96.1 million bpd in 2021 and 99.4
million bpd in 2022, versus 90.9 million bpd in 2020. The OPEC expects
demand to average 99.70 million bpd in the fourth quarter of 2021. read more

 

Meanwhile, India's private refiner Nayara Energy hopes to operate its
400,000 barrels per day (bpd) refinery at close to 100% capacity in 2021 as
fuel demand picks up, CEO Alois Virag said. read more

 

India's fuel demand is likely to rise by 9%-11% as its economy is "steered
towards higher growth" after the easing of the second wave of COVID-19
infections, he said.

 

"When it comes to refining, petroleum products, we remain cautious," said
Petronas' Arif, adding that travel curbs continue to weigh on aviation fuel
demand recovery.

 

"We'll see recovery hopefully towards the end of this year, early next
year," Arif said, adding "there's oversupply of refining capacity".

 

The Thomson Reuters Trust Principles.

 

 

 

Crypto-linked stocks plunge in Hong Kong, bitcoin steadies

(Reuters) - Cryptocurrency-linked stocks dropped in Hong Kong on Monday
morning, after Chinese authorities intensified their crackdown on the
industry, while major cryptocurrencies steadied.

 

Shares of crypto asset manager and trading firm Huobi Tech (1611.HK), an
affiliate of Huobi Global, one of the world's largest exchanges, fell more
than 30% after the opening bell.

 

Huobi Global said on Sunday it had stopped taking new mainland customers
from Friday and would close accounts belonging to mainland-China based
clients by the end of the year to comply with local regulations. read more

 

China's regulators intensified a crackdown on Friday, banning cryptocurrency
transactions and mining, and saying that overseas exchanges are barred from
providing services to mainland investors via the internet and that
mainland-China based employees of overseas crypto exchanges would be
investigated.

 

OKG Technology Holdings Ltd (1499.HK), a fintech and construction company
majority owned by Xu Mingxing the founder of cryptoexchange OK Coin, fell
more than 20%.

 

However, cryptocurrencies traded firmly on Monday, having rebounded from
selling driven by the Chinese crackdown as buy-the-dip speculators swooped
in.

 

Bitcoin was up about 2.4% in Asia trade at $44,250, having fallen to just
below $41,000 in the wake of Friday's announcement of a blanket ban on
crypto mining and transactions in China - the most wide-ranging clampdown
yet. read more

 

Rival token ether rose 3% to $3,163 and has recouped its Friday losses.

 

The Thomson Reuters Trust Principles.

 

 

Aldi UK to invest $1.8 bln to accelerate growth

(Reuters) - The British and Irish arm of German discount supermarket group
Aldi said on Monday it would invest 1.3 billion pounds ($1.78 billion) over
the next two years to open 100 new stores, as it bids to accelerate its
growth in market share.

 

Aldi and German rival Lidl have grown rapidly in the last decade, forcing
Britain's big four supermarkets of Tesco (TSCO.L), Sainsbury's (SBRY.L) Asda
and Morrisons (MRW.L) to cut prices and compete more aggressively.

 

Aldi is Britain's fifth largest supermarket group, with 920 UK stores and an
8% market share.

 

It said its plans were expected to create over 2,000 new jobs next year,
adding to the 7,000 permanent roles created over the past two years.

 

The group said 2020 sales rose 10.2% to 13.5 billion pounds but operating
profit fell 1.2% to 287.7 million pounds, reflecting the costs of COVID-19.

 

Aldi enjoyed over a decade of strong growth on the back of new store
openings but its market share edged lower during the pandemic, partly due to
a lack of a significant online offer.

 

The crisis has prompted Aldi to accelerate its push into home delivery via a
partnership with Deliveroo (ROO.L) so it can benefit from an increase in
demand that is expected to last.

 

It has also introduced a click and collect service which is now live in 200
stores.

 

($1 = 0.7311 pounds)

 

The Thomson Reuters Trust Principles.

 

 

 

Nigeria: As Covid Shut Businesses in 2020, Only Four Nigerian Banks Made
More Money Online

Most Nigerian banks ironically lost e-business revenue in 2020 after the
coronavirus crisis-induced lockdowns pushed more people online, with
increased online payments and transfers, with only four of 12 banks reviewed
recording increased e-business income.

 

Only Access, UBA, First Bank and Fidelity Bank made money that year compared
to the previous 2019. Two of the biggest five -- <a target="_blank"
href="https://www.gtbank.com/">Guaranty Trust Bank</a> and Zenith Bank --
lost big, with Zenith losing 37 per cent and GTB losing 25 per cent of their
e-business revenue.

 

Taken together, the 12 banks recorded more e-business income in 2020 than
they did the previous year.

 

E-Business

 

 

E-commerce is seeing a boom never before experienced in Nigeria, made
possible by a buoyant consumer spending, a dynamic youth population (one of
the largest in the world) and a smartphone revolution that seems to be
erasing all social divides: the educated and the unlearned, the affluent and
the poor, the young and the old, males and females.

 

Now at $12 billion, the market could balloon to $75 billion come 2025,
according to an International Trade Administration <a target="_blank"
href="https://www.trade.gov/knowledge-product/nigeria-ecommerce">forecast</a
>, underscoring how digitalisation can radically transform bank-supported
transactions and other payment processes in just a few years.

 

As the decade ticked to its end in 2020, the boom took a new turn on a scale
so vast that the volume and value of electronic banking deals initiated by
customers across payment channels outpaced the previous year's and touched
the farthest peak since Nigeria's interbank settlement database began formal
record in 2017.

Amid the pandemic, governments imposed lockdowns and other
contact-forbidding measures. But COVID-19 has became a positive disruptive
force that revolutionised the where, when and how people conduct everyday
transactions, which are increasingly taking various do-it-yourself modes
across e-channels.

 

With the growth rates of e-payment transaction volumes and values for 2020
far surpassing those of the preceding years across most channels and early
data for 2021 even showing a more optimistic trend through higher volume and
value levels January through May, there is no doubt e-banking has reached
its breakout moment.

 

Nigerians conducted electronic transactions in just four payment categories
(POS, E-Bills Pay, NIP and ACH) summing up to N178 trillion in 2020 alone, a
half bigger than the N119 trillion reported the year before, according to
the Nigerian Inter-Bank Settlement System (NIBSS), which runs the banking
sector payment database in Africa's largest economy.

And that is not to mention transactions like mobile money operations, web
payments, ATM operations and others that are not strictly electronic in
nature.

 

The progress recorded in volume was similarly impressive, if not more, with
the magnitude of deals executed during the year standing 77 per cent higher
than 2019's at 3.734 billion.

 

But perhaps more significant than the figures are the far-reaching benefits
this rapid shift from legacy banking to a more digitalised settlement system
having individuals set up transactions directly for themselves or others
will have for banks and their customers, businesses and the economy.

 

E-banking is imposing a new order that will reduce footfall in banks'
service outlets and cut banking hall traffic beyond measure, helping ease
pressure off staff and operations, and of course curb costs.

 

For instance, mobile fund transfers, obviously more popular among the youth
by reason of their deeper obsession with digitalised services than others,
rose by 222 per cent to 132.979 million, affirming a deeper uptake of
e-products and a consistent one at that, when the previous three years are
considered. In value terms, mobile fund transfers nearly tripled during the
year, reaching N3.050 trillion.

 

Banks' earnings

 

Individually, most Nigerian banks lost e-business revenue. They, however,
earned N217.869 billion between them in 2020, which compares with the
N217.645 billion of 2019. Even though the margin was narrow, the 2020 figure
highlights the resilience of lenders in bracing up to industry reforms
capable of hurting income.

 

In January, the Central Bank of Nigeria <a target="_blank"
href="https://www.cbn.gov.ng/Out/2019/CCD/Guide%20to%20Charges%20by%20Banks%
20Other%20Financial%20and%20Non-Financial%20Institutions%20eff%20Jan%201%202
020.pdf">implemented</a> a rate cut on fees from e-banking deals of
different transaction value ranges. But that could not hold a couple of
banks from bettering the previous year's figures.

 

Interestingly, of the four banks that posted growth in e-business income of
all the commercial banks listed on the Nigerian Exchange (excluding Ecobank
Transnational Incorporated) three belong to the Big 5 Banks commonly called
FUGAZ after the first letters of their names.

 

It points not only to the earnings power of Nigeria's biggest banks by
assets but also to how massive that power is as to enable those three of the
12 banks tracked by PREMIUM TIMES, to turn the e-business earnings of the
entire group from recording a fall in a year in which the economy hit its
lowest moment in four years and entered a recession.

 

BANKS E-BUSINESS INCOME FOR 2020

 

BanksE-Business Income (2020)E-Business Income (2019)

 

GTBN11.771bnN15.662bn

 

Access (plus card product income)N56.093bnN36.041bn

 

UBAN44.248bnN38.766bn

 

FBN HoldingsN48.680bnN48.033bn

 

ZenithN27.078bnN42.511bn

 

Stanbic IBTC HoldingsN2.737bnN3.394bn

 

UnionN7.041bnN7.689bn

 

FCMBN8.612bnN11.040bn

 

SterlingN4.975bnN6.785bn

 

FidelityN1.384bnN1.024bn

 

UnityN2.643bnN2.941bn

 

WemaN2.607bnN3.759bn

 

TotalN217.869bnN217.645bn-Premium Times.

 

 

 

Nigeria: Back to Basics - How to Make Foreign Investment Work for Nigeria

WE all know that Nigeria is Africa's largest economy, and with a population
of 200 million people, one with huge potential for growth.

 

It is, therefore, a country of significant potential for foreign direct
investment and foreign investors. But, for several reasons, including a weak
macroeconomic environment, policy inconsistency and the absence of a well
defined strategy for FDI as a component of economic growth strategy, FDI
into Nigeria has declined markedly in the past several years.

 

My purpose here is to ask some fundamental questions about FDI, and
hopefully provide some answers, that can guide both Nigerian policy making,
on the one hand, and foreign investors, on the other. But I must admit that,
while the purpose of making profits for investors is well understood and
understandable, my perspective here is mostly that of my country, Nigeria. I
believe, actually, that making FDI work for Nigeria can be a big win-win for
both Nigeria and foreign investors.

Does FDI cause growth and development?: Can investment flows play a
fundamental role in economic transformation? The answer is: "It depends...
". We must first remind ourselves, from the perspective of a developing
country and a frontier market, of the difference between development,
economic growth and economic transformation. There are many different shades
of understanding of the phrase "economic development", but to me it means
the continuous improvement of the prosperity and quality of life of citizens
of a nation, region, or local community.

 

My focus here is on human development - access to clean drinkable water,
quality healthcare and education, nutrition, skills and jobs, improvements
in the average longevity of a population and so on. Economic growth is
measured through the Gross Domestic Product - the sum total of goods and
services produced by a country in a given year. Economic transformation
speaks to the structure of an economy, a shift from subsistence agriculture
or a reliance on crude natural resources to complex, value added
manufacturing and export. It is important to bear these distinctions in mind
as we look at how useful to Nigeria FDI has been (or has not) and can be. We
must also bear in mind that despite being the largest economy in Africa,
Nigeria's poverty profile remains grim, highlighting the importance of the
distinction between human development and economic growth.

Our country's poverty rate was 40 per cent in 2020 according to the Nigerian
Bureau of Statistics, and projected to rise to 45 per cent in 2022. More
than 90 million people, nearly half of the population, live in extreme
poverty. The literacy rate is 62 per cent (low compared to several African
countries), life expectancy is 60, and the unemployment rate is 33 per cent.
It is against this background that we should situate the potential role of
FDI in Nigeria.

The conventional wisdom is that FDI is essential for development. It
certainly plays an important role, but only if certain conditions exist or
are met. Traditionally, the interest of foreign capital in a destination
country is not the country's development. It is, as noted earlier, to make a
profit, and extract raw materials and other advantages, including cheap
labour, where they exist. It is the responsibility of the FDI destination
country to ensure that investment flows serve its strategic national
interest.

 

In the case of countries such as China and Singapore, FDI facilitated
economic transformation. But these countries did not blithely assume that
FDI in and of itself would work a miracle for them. They approached foreign
investment with a strategic mindset, keeping a firm grip on the evolution of
their national economies and calibrating their FDI reception strategies to
shifts in their domestic conditions such as cheapness of labor and the
availability of skilled labour.

 

But there also is significant evidence that FDI does not automatically
trigger productivity. It can complement, but not substitute local factors
that are essential for development. Studies, including one by the United
Nations Industrial Development Organisation, UNIDO, in East Asia, have shown
that only very few countries have demonstrated any real evidence that FDI
caused productivity growth.

 

African countries, including Nigeria, need to understand three important
factors regarding FDI: First, the impact of FDI on developing countries
depends very much on the host country's level of development. FDI has more
impact in high-income developing countries than in low-income ones.

 

In the latter, factors such as the quality of, and access to secondary
school education are more important for development. Second is the
"endogeneity factor", which argues that well performing economies based on
endogenous growth and transformation models, rather than from the standpoint
of globalization - of which FDI is a major plank - attract more FDI.

 

Growth thus drives FDI, not vice-versa. Third, the assumed benefit of
technology transfer from FDI only happens when the investment is made in
economies which themselves are actively engaged in research and
development(R&D). Foreign investment can help lift a country from poverty if
it is targeted at the real economy, for instance electricity, manufacturing,
service industries, and export oriented industries, and uses local
suppliers, as opposed to a lopsided focus on extraction industries.

 

The most important requirements for FDI to successfully contribute to real
development in a country like Nigeria are the two key "location factors" -
the presence of a well educated workforce, and infrastructure. It is this
question of the absorptive capacity of an economy, which is determined by
how well educated and skilled a workforce is to take advantage of the
possible technology and employment generated by FDI, that determines whether
or not FDI contributes to real economic growth.

 

Of course, such growth must be inclusive growth -- broad based across
sectors and with increased productivity of the labor force, if it is to be
meaningful. From this perspective, we (Nigeria) need to return to the
drawing board. Instead of an indiscriminating belief in the transformative
power of FDI - akin to how the philosophy of foreign aid held sway in its
hey day - and thus possibly putting the cart before the horse, Nigeria
should focus on the kinds of foreign investment that help it solve the twin
challenges of human capital and electricity infrastructure as a sustainable
base for other kinds of FDI.

 

Nigeria strategy for FDI: First, have a strategy: the priority sectors for
the governments at federal and state levels need to be clear. The quality of
investment, the quality of the government structure that handles FDI and
formulates investment policy, and measurable, long term objectives regarding
FDI and performance management regarding the contribution of FDI to economic
development, are essential. These should be woven into a single thread that
becomes the basis for execution, communication and engagement with potential
investors.

 

Develop factor endowment: with skilled human capital as a priority need,
strategies for FDI must focus on this frequently neglected objective. The
presence or absence of productive knowledge in a society is the most
important foundation for economic transformation, which remains necessary
for a country such as ours with an economy still in need of diversification.
Align FDI with a transformational paradigm shift, for example away from
extractive industries or towards value-added derivatives of such industries;
Improve national coordination of FDI activities between national and sub
national units; Offer strong investor protections: legal regimes in Nigeria
must be adapted to facilitate increased flows of high quality investment, in
particular in light of regional trade realities such as ECOWAS, and now the
African Continental Free Trade Area, AfCFTA.

 

Beyond this, Nigerian authorities - and foreign investors - should
incorporate political risk guarantees into major FDI agreements. This
includes making use of guarantees offered by the World Bank Group's
Multilateral Investment Guarantee Agency, MIGA, for losses relating to
currency inconvertibility and transfer restrictions, expropriation,
terrorism, war and civil disturbances, breaches of contract, and failure to
honor sovereign financial obligations.

 

Partial risk guarantees offered by the World Bank's International
Development Association, IDA, the arm of the bank that lends to low income
and lower middle income developing countries, cover an even more extensive
range of situations than MIGA products. They can support participants in
private projects such as Build-Operate-Transfer, BOT, and concession
projects, public private partnerships, PPP, and privatisations. Improve the
quality of governance and institutions: assessments of governance and
institutional capacity to create a sustainable investment environment play
an important role in attracting quality investment. The Nigerian Investment
Promotion Commission has done a good job in recent years despite a difficult
macroeconomic environment, including in terms of revenues it has generated
for the Federal Government from foreign investments into Nigeria.

 

I know from personal experience that, despite the early stages of the
security challenges from terrorism, the Central Bank of Nigeria's
far-reaching reforms in the banking and financial sector which stabilised
the sector after the global financial crisis of 2008, contributed to marked
increases in FDI into Nigeria from 2009-2014. These reforms led to improved
ratings of Nigeria by agencies such as Standard and Poor's, Fitch, as well
as the inclusion of Nigeria in the JP Morgan Africa Emerging Market Bond
.basIndex alongside South Africa, which was previously the only sub-Saharan
African country on the index.

 

National interest and foreign investment: Global capital seeks expansion in
order to grow. Providing investors the opportunity to pursue that
fundamental interest must be based on the condition that it advances another
- the national interest of the FDI host country. FDI must serve the cause of
national economic growth, development and structural transformation rather
than a one-sides creation of wealth in favour of investors. FDI frameworks
and agreements must be a win-win scenario that creates jobs, avoids
servicing the rent-seeking interests of political elites, and promotes
sustainability by protecting the natural environment.

 

Several industrialised countries and economic powers increasingly take a
national interest approach to FDI. Australia and China, for example, subject
FDI proposals to formal "national interest" tests. Definitions of national
interest vary according to the circumstances of individual countries. While
Nigeria should welcome investments in electricity and telecommunications
infrastructure, in China foreigners may not invest in these areas as well as
in rare earth minerals under Chinese foreign investment regulations. Foreign
investors are not allowed to invest in land in Australia.

 

Nigeria should now require, as a matter of strategic national interest, that
any investment in natural resources and solid mineral include a beneficiary
on plan to add value to them before export, as opposed to extraction and
exports of crude oil and other natural resources. We should also restrict
foreign investments in land that are primarily to for the purposes of food
security of foreign countries under the guise of "agricultural investments".
Here the situation in Northern Nigeria comes to mind. This region of Nigeria
has been economically depressed by increasingly dire security challenges for
the past decade, and has higher poverty rates than the rest of the country.
Restoring security in Northern Nigeria and the rest of the country is a
prerequisite for productive investment in the region. Illegal mining of gold
by "foreign investors" is reportedly taking place in Zamfara State in the
Northwest and Osun State in the Southwest regions. These kinds of activities
cannot take place in any well governed country.

 

I believe, and make it as a policy recommendation, that going forward,
Federal and state governments in Nigeria should develop an investment regime
in which investments in natural resources such solid minerals which are
prevalent in the northern part of the country or, anywhere else in Nigeria,
must have a value addition industrial plan, along with skills training for
unemployed youth in the area of the investment, as a component of the
investment package. This will help end the exploitation of our country's
natural resources with negative consequences (the "resource curse") and
protect Nigeria's strategic national interest of economic diversification
and transformation.

 

In conclusion, Nigeria must now review its entire approach to foreign
investment against the background of all the foregoing. Foreign investment
can drive economic growth, but we must first firmly establish the
foundations to make that outcome a reality. Until then, it might that we are
punching below our weight on this sensitive subject.-Vanguard.

 

 

 

Ghana: Rice Farmers Need Finance for New Technologies, but Banks Don't Trust
Them

New farming technologies have the potential to improve livelihoods and food
security in Sub-Saharan Africa. Better seed varieties, soil fertility
practices and pest management can all increase productivity. A United
Nations Development Programme report says growth in the region's agriculture
is more effective than other economic sectors when it comes to ending hunger
and reducing poverty.

 

Steps have been taken over decades to enhance farmers' access to improved
seeds and technologies that are essential to stimulate agricultural
transformation on the continent. The efforts were at both local, national
and regional levels by government and donors.

But studies continue to show that the adoption rate of modern technologies
is low among the region's farmers. This situation has resulted in poor
agricultural productivity, high-levels of food insecurity and rural poverty.
Over 65% of the households in Sub-Saharan Africa are mainly smallholder
farmers, many are poor and vulnerable.

 

Smallholder farmers in the region have a common problem. They tend to lack
access to the finance they need to adopt modern technologies. Finance could
be in the form of loans or credit.

 

Using the case of rice farming in Ghana, we conducted a study to understand
the challenges smallholder farmers face in accessing loans. We wanted to
find out if this was preventing them from adopting modern technologies, and
whether these technologies would improve their productivity and incomes.

 

We found that banks and financial institutions don't trust smallholder
farmers. They relay their mistrust by, for example, requesting outrageous
collateral, a high sum of savings capital, and a high-interest rate for
agriculture loans. There are also usually long delays in accessing any
funds.

We suggest mechanisms to improve access to finance that would help farmers
produce more rice.

 

Our research

 

We interviewed 100 smallholder rice farmers in the Shia-Osuduku district in
the Greater Accra region of Ghana. In focus group discussions and
interviews, we asked about access to credit and loans, and how this
influenced their use of modern production technologies.

 

We focused on rice farmers because rice is the second most important food
crop in Africa. Rice is also a significant source of income for rural
farmers. In Ghana, rice is the second most important cereal and is fast
becoming a cash crop for many farmers. Rice demand in Ghana is projected to
grow at a compound annual growth rate of 11.8%.

At the moment, most rice farmers are planting old rice variety seeds using
broadcast seeding. These give poor yields compared to those using modern
technologies. Such technologies include new rice varieties, a high-capacity
thresher for rice, a mobile application called RiceAdvice that provides tips
on rice farming, mechanical weeders that could reduce labour in rice
production, and localised farmer advice for nutrient management.

 

These farmers are optimistic that if they can access these technologies,
they will obtain better yields and improve livelihoods but said during a
focus group discussion:

 

We are poor farmers and cannot afford these technologies unless we get some
financial support from government or we get loans from banks to invest in
these technologies.

 

Another farmer said:

 

If you are lucky and you get money from the bank on time, and you invest it
in modern technologies, you are sure of a good yield.

 

Our study revealed that the greatest obstacle to access loans from banks and
village savings companies by farmers is the inability of smallholder farmers
to pay back loans when the harvest fails or they suffer post-harvest crop
losses. A situation that is likely to be reduced to near zero when farmers
adopt modern rice technologies that have been proven to be climate-smart as
well.

 

These financial institutions, usually village savings and loan group,
microfinance companies or rural banks don't trust that farmers will be able
to repay loans. So they use certain tactics to avoid granting loans. For
example they are unwilling to share information about innovative financial
products. Or they insist on farmers having huge amount of saving capital
before borrowing. Some financial institutions demand outrageous collateral
and multiple guarantors for credit. Others impose high interest rates beyond
the 31% average interest rate set by the Bank of Ghana in 2017.

 

Some institutions erect unnecessary bureaucratic delays to process loans for
smallholder farmers.

 

Microfinance companies and rural banks are more willing to approve credit
facilities and loans to non-agricultural sectors than to smallholder
farmers. Nevertheless, our study shows that farmers who invest in modern
technologies such as improved seeds and fertiliser see an increase in yields
and household income, and are able to pay back their loan on time.

 

Overall, 88% of the rice farmers interviewed said their inability to adopt
modern technologies to improve productivity and achieve household economic
well-being was connected to their lack of access to loans to invest in these
technologies.

 

What we recommend

 

To improve smallholder farmers' access to loans, government must provide
support for the sector. It can introduce agriculture insurance policy
systems to reduce the risk of non-payment of loans if harvests fail. This is
essential to addressing mistrust by financial institutions of smallholder
farmers.

 

Smallholder farmers should also develop a saving culture and join farmer
group associations for collective bargaining for loans from financial
institutions.

 

Innovative solutions such as a warehouse receipt financing system that
allows farmers to deposit their harvest in a certified warehouse and then be
issued with a document called warehouse receipt that they can use to access
loans from financial institutions, would address two barriers: lack of
savings and lack of collateral and guarantors.

 

The banks and other financial institutions must employ innovative ways to
reduce the bureaucracy in processing loan facilities. They should make more
effort to educate farmers about their processes and requirements to acquire
loans before the onset of the rainy season. This is critical to enable
smallholders to prepare adequately before applying for credit.

 

Philip Tetteh Quarshie, PhD Candidate/Graduate Teaching/Research Assistant,
University of Guelph and Evan Fraser, Director of the Arrell Food Institute
and Professor in the Dept. of Geography, Environment and Geomatics,
University of Guelph.

 

 

 

Tanzania: Come All Ye Who Are Loaded - Samia's Offer to Investors Abroad

President Samia Suluhu Hassan this week took advantage of the 76th session
of the United Nations General Assembly (UNGA) to woo investors from the US
and the European Union to Tanzania, promising a raft of policy changes that
will make the business environment investor-friendly.

 

In her first attendance of the Assembly, and six years since a Tanzanian
president last addressed the UNGA (it was Jakaya Kikwete who last addressed
it in 2015), the Tanzanian leader used her address to market her country as
a trading destination.

 

"I want to take this opportunity to invite you to trade more with our
country," President Samia told a joint gathering of US investors and the
Tanzania Private Sector Foundation on the sidelines of the Assembly.

On Wednesday, she participated in a meeting between Tanzanian and US
business people and urged strengthening of trade between the two nations.

 

She expressed her dissatisfaction with the balance of trade between the two
countries, quoting 2019 figures which show that Tanzania imported goods
worth $241 million and sold goods worth just $46 million.

 

"The United States invested $5.55 billion and employed 44,118 people while
Tanzania invested only $1 million - a small amount compared with the size of
the US economy in the world and the opportunities available in Tanzania,"
she said.

 

"I would like to see trade increase, as Tanzania is a member of the East
African Community and also the Southern African Development Community, which
provides opportunities for US investors and traders in a market with a
population of 450 million people, which is favourable for investment."

 

President Samia also informed the business people that her country had
finally signed the agreement for the African Continental Free Trade Area,
through which Africa is relaxing trading conditions in a market of 1.3
billion people.

 

Political observers say the country stands to benefit immensely from
President Samia's participation in the Assembly.

 

"She has made deliberate attempts to improve the image of the country both
regionally and internationally by visiting all its neighbours," noted James
Aggrey Mwamu, a former president of the East African Law Society.

 

Areas where the country stands to gain include strengthening economic
diplomacy, attracting investments and promotion of tourism.

 

"Her international travels are very significant. What she is telling her
neighbours is that they can deal with her," Mr Mwamu said.

Her decision to reverse the national approach and sentiment around Covid-19
and roll out of vaccination fits in with US President Joe Biden's plans to
contain the virus that has ravaged people worldwide.

 

She also met with UN Secretary General Antonio Guterres, president of World
Bank David Malpass and director-general of World Trade Organisation Ngozi
Okonjo-Iweala.

 

"They agreed to co-operate in the areas of economic growth and combating the
Covid-19 pandemic," said a dispatch after the meetings.

 

Shift in foreign policy

 

The talks in these meetings signalled a shift in Tanzania's foreign policy
under President Samia from inward-looking to embracing the world for growth.

 

"It is not by sheer coincidence that I chose to attend the UN General
Assembly as my first trip outside Africa since I took office. I did so out
of my deep sense of conviction and faith in multilateralism in solving the
challenges facing our world today," she told the audience in her address to
the General Assembly on Thursday night.

 

"Under my stewardship, Tanzania will remain a formidable member of the
United Nations and a dependable supporter of multilateralism. We will keep
our arms open to those who embrace us and engage with us."

 

Ahead of the meetings, civil rights groups had presented a petition on a
list of laws and policies they say should be change to make Tanzania better.
The International Center for Not-for-Profit Law (ICNL), for instance, asked
the Tanzanian President to address gaps in media laws and political and
civil society regulations and freedoms.

 

Critics charge that she has gone back to some of the old practices, citing
the recent arrest and detention of opposition leaders on charges they claim
are politically contrived.

 

President Samia, who is promising the world that Tanzania has turned a new
page, offered to correct some of the laws on investment and governance,
which are necessary for stability.

 

"Aware of the nexus between economic growth and governance, we managed to
maintain peace, political stability with a vibrant democracy and
institutionalised good practices, upholding rule of law and human rights,"
she said.

 

She added that her administration is implementing "gender-responsive
macro-economic plans," noting that, as a woman, the burden of expectations
is "heavier on my shoulders" to balance the equation. That will include
reforming the budget to ensure more funds go to programmes for women and
girls, stimulus packages like easily accessible credit lines to uplift women
from poverty.

 

She gave no timelines but said her government "is reviewing policy and legal
frameworks in order to come up with actionable and measurable plans to
ensure economic empowerment of women but also other aspects pertaining to
gender equality and gender parity."

 

Recently, the International Monetary Fund approved $567.25 million in
emergency financing package to Tanzania under the Rapid Credit Facility to
address health, humanitarian and economic costs of the pandemic.

 

"This emergency financing will help finance Tanzania's urgent balance of
payment needs stemming from the outbreak of the Covid-19 pandemic," the Fund
said.

 

Tanzania had received Covid-19 support before, even when the John Magufuli
administration denied the virus's existence within its borders.

 

As Covid-19 ravaged the world, Magufuli did not initially lock down the
country, and mostly doubted its existence. He also closed the door on some
external partners.

 

This week, President Samia admitted that Tanzania was impacted by the
pandemic as other countries, citing the collapsing tourism sector, which has
been the mainstay of the economy.

 

"Developing nations must be assisted in addressing the socioeconomic impact
of Covid-19. We cannot afford to take refuge on the onset of Covid-19 as an
excuse for not making progress in achieving Sustainable Development Goals,"
she told the Assembly.

 

The SDGs are meant to be achieved by 2030, but the pandemic could derail
progress unless efforts are made to help the poor, she argued. First,
countries that committed to the various climate change programmes will have
to honour their commitments on green investments, she noted.

 

Paris climate pact

 

Tanzania will demand that the rich countries, mostly responsible for
pollution, pay their $100 million committed funding by 2025, under the Paris
Agreement on climate change.

 

Samia expressed hope for economic growth, but noted it had slowed down from
6.9 percent before the pandemic to the current 5.4 percent forecast.

 

She also met and held talks with the president of the Council of the
European Union (EU) Charles Michel, who identified four priority areas for
discussion: Covid-19, climate change, security in Mozambique and the digital
revolution.

 

Among other things, President Samia said her government is strengthening
health infrastructure, even in the face of challenges in accessing medical
equipment and the required human resources to deal with the pandemic.

 

"I wish to extend our invite to the European Union to consider working with
us in those areas," she said.

 

Burundi's President Evariste Ndayishimiye also attended the Assembly while
Kenya's Uhuru Kenyatta participated virtually.

 

President Ndayishimiye told the audience his country is now past the war
years, but was still facing a war against poverty.

 

"The only enemy that remains a threat to citizens, in addition to the
Covid-19 pandemic -- which is common to all of us -- is poverty,"
Ndayishimiye said on Thursday.

 

"We must make concerted, structural changes that will enable a quantum
increase in investment and technology transfers, not as charity but out of
solidarity," President Kenyatta said in his recorded address on Wednesday.

 

"A fast developing Africa will offer the entire world the benefit of its
demographic dividend of youth and vast economic opportunities. African can
become an engine of sustainable global growth but also as an exporter of
peace, stability and transformative prosperity."

 

Common enemy in Covid-19

 

During crucial sidelines meetings Covid-19 was cited as a common enemy, even
when leaders discussed trade deficits, food security problems, climate
change or intellectual property rights.

 

At the UN Food Security Systems Summit, for example, the World Health
Organisation reported that three billion people in the world have no access
to a healthy diet, the reason for 60 percent of ailments in the world.
During the pandemic season, the WHO said the situation got worse, affecting
370 million schoolchildren who relied on school meals.

 

"Health and nutrition need to be a core, cross-cutting and rights-based
underpinning of food systems transformation. Fair, equitable and sustainable
transformation must start now," WHO said on Thursday after the summit on
food security.

 

"Food systems in all regions of the world need to be reimagined to deliver
nutritious, safe, diverse, and affordable foods, to combat hunger, food
insecurity, malnutrition, and food-borne illnesses, and to prevent
non-communicable diseases."

 

Leaders said better food security systems will lie in innovation and new
technology that will be less hazardous to the environment but produce
nutritious food products.

 

President Samia noted that it was disheartening to see Africa's tally of
vaccinated people at three percent as the rich seek booster shots for
Covid-19.

 

Almost all African leaders who spoke called for better green investments and
a role for the continent as a partner, not just a recipient of aid.-East
African.

 

 

 

 

 

 

 

 

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2021

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


Star Africa

AGM

virtual

September 23 -11am

 


 

National Unity Day

 

December 22

 


 

Christmas Day

 

December 25

 


 

Boxing Day

 

December 26

 


 

Public Holiday in lieu of Boxing Day falling on a Sunday

 

December 27

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

PPC

 

 


Starafrica

Fidelity

Turnall

 


Medtech

Zimre

Nampak Zimbabwe

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


(c) 2021 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:
<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
344 1674

 


 

 

 

 

 

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